Cameron's schoolboy error would hit the region’s drivers

Wednesday 22nd October 2008

Geoff Hoon MP, Labour's Transport Secretary, today released research showing how David Cameron would increase the cost of driving a car, putting 3p on the price of unleaded fuel for North East drivers. He said:

"A promise on fuel tax which David Cameron made to win headlines in July would now add millions of pounds to British families' tax bills because of changing oil prices. For all his smooth patter, the truth is Mondeo drivers would now be paying £2.10 a tank more because of David Cameron's schoolboy error.

"He was happy to highlight this promise when it was launched but today he is keeping very quiet about its real impact on family budgets. Just like with his other vague pledges to increase "green taxes", David Cameron doesn't want to come clean with people about his plans.

"While Labour is freezing fuel duty for a whole year, the Tory plan of raising this tax on businesses and families right now would hit our economy hard. Not only that, but trying to reduce recent falls in petrol prices would undermine our work to combat inflation.

"When times are tough and people are worried about their cost of living, this just shows the risk of putting a headline-seeking novice in charge."

Labour’s Hilary Armstrong, MP for North West Durham said;

“This is exactly the wrong time for David Cameron to be putting up the cost of driving. Because of an opportunist announcement, made for the sake of generating a few headlines earlier in the year, North East motorists would now be seeing the price at the petrol pumps rise instead of fall. Representing a rural constituency, I know how fuel bills are a major concern for local families at the moment and fuel duty rises are the last thing they want.”

ENDS
 
1. The Conservative Party launched their fuel duty stabiliser in July 2008 which would vary taxation on fuel based on changes to petrol prices. The principle of their plan is that "when fuel prices go up, fuel duty would fall. And when fuel prices go down, fuel duty would rise" (Conservative Party Consultation Document, p3).  This is regardless of the wider economic situation.
 
2. In July the Conservatives promised that "if a Fair Fuel Stabiliser had been introduced at the 2008 Budget - fuel would be 5p per litre cheaper" (Conservative Party Policy Document, p3). 

This received headlines such as
"TORIES VOW TO SLASH FUEL DUTY"
Press Association, 6 July 2008
"TORY TAX CUT TO BEAT HIKE IN FUEL"
The Sun,7 July 2008
"TORY TAX PLEDGE TO 'SHARE PAIN OF FUEL RISES"
Financial Times, 7 July 2008
"WE'LL SLASH 5P OFF FUEL DUTY TO HELP FAMILIES SAY TORIES"
The Express, 7 July 2008
 
3. This was calculated on the basis
"The average price of unleaded petrol in the UK rose from 108p in April to 118p in June. ...if a Fair Fuel Stabiliser had been in operation that reduced the overall sensitivity of the public finances to oil prices, the Government could have used the windfall revenues from higher oil prices to reduce the tax of fuel by 5p. So instead of going up by 10p, pump prices would only have risen by 5p."
(Conservative Party Policy Document, p3).
 
4. Current petrol prices are now on average around 102p (Source: www.petrolprices.com, cited by the Conservatives on page 7 of their Policy Document).
Calculating on the same basis as the Conservatives, this is 6p lower than in April.
Under the Conservative policy, this would mean that the Conservatives would have to increase fuel duty by 3p.
 
5. In their policy paper the Conservatives claim that in June their policy "would save up to £3.50 on each tank of fuel for a Ford Mondeo, or £2.60 for a Vauxhall Astra".  Now, based on the same assumptions, rather than cutting the cost of each tank of fuel, their policy would increase the cost by £2.10 on each tank of fuel for a Ford Mondeo or £1.56 for a Vauxhall Astra.
6. Go to www.labour.org.uk to see the impact on filling up a Ford Mondeo.